Former Cold Stone franchisee Cecil Rolle, who has been engaged in litigation with the franchisor said, “I’m hoping the acquisition of Kahala Corp by the Serruya Family is a watershed moment for Cold Stone Creamery franchisee profitability and the harmonization of the franchisor to franchisee relationship, which has been as contentious as they come. The Serruya Family will have to prove to me they are serious about the concerns of the franchisees and their families.

Blue MauMau
August 20, 2013

Kahala Acquired in Auction by Serruya Family
Janet Sparks

Kahala bought by Serruya Family of Canada. photo/bmm

TORONTO – The Serruya family today announced that they have acquired a controlling interest in Kahala Corp., owner of Cold Stone Creamery and many other franchised brands. The transaction was completed on Monday.

The Serruya family brings substantial experience in franchising to Kahala. They are planning for growth of Kahala brands in both international and North American markets.

Commenting on the transaction, Michael Serruya, the new chairman and Co-CEO of Kahala, stated, “We are extremely pleased to become major shareholders of this outstanding company. We look forward to using the experience and skillsets that we’ve obtained over the last 26 years in this industry, as owners and management of numerous quick service restaurant brands, to work closely with the entire Kahala team to enhance and strengthen the franchise business model.”

Kevin Blackwell, the founder and now Co-CEO of Kahala shared that he has known Michael Serruya for over 20 years and holds him to the highest regard not only professionally but personally. “It is without doubt that Michael’s expertise and experience in the franchising world will have a positive impact on Kahala and its future, and I know that Michael will be a tremendous asset to Kahala. The financial strength of the company has been significantly enhanced as a result of this transaction. It positions Kahala as an industry leader and will allow us to grow our portfolio by acquiring or partnering with other world class brands.”

Canada's Globe and Mail reported a few hours ago: "The Markham, Ont.-based Serruya family bought a controlling interest in Cold Stone’s parent company in an auction. The deal includes a number of fast-food chains, but Cold Stone is the company’s most lucrative asset, owing to its highly visible partnership with the coffee and doughnut chain, with which it shares space at more than 250 stores across Canada and the United States."

Former Cold Stone franchisee Cecil Rolle, who has been engaged in litigation with the franchisor said, “I’m hoping the acquisition of Kahala Corp by the Serruya Family is a watershed moment for Cold Stone Creamery franchisee profitability and the harmonization of the franchisor to franchisee relationship, which has been as contentious as they come. The Serruya Family will have to prove to me they are serious about the concerns of the franchisees and their families. Rolle has been an advocate for current franchisees, assisting them in profitability and other issues.

Franchise attorney Robert Zarco of Zarco Einhorn Salkowski & Brito said, “I hope and expect this will be a much needed and refreshing change that will serve as a catalyst to improve the existing strained relationship between the Kahala franchisees and the franchisor.” Zarco and his firm in Miami have been involved in litigation over the years in separate cases against Kahala, including Cold Stone, Blimpie and other brands.

The following is a letter from the desk of Kevin Blackwell… 08.20.13
Co-CEO

Kevin Blackwell (l) and Michael Serruya

Dear Kahala Franchise Community,

I am pleased to announce the Serruya family has acquired a controlling interest in Kahala effective immediately.

The Serruya family brings substantial experience in franchising to our organization as owners and managers of numerous quick service restaurant brands, such as Yogen Fruz® and Swensen's with over 1,400 locations in 46 countries.

Michael Serruya will serve as Co-CEO of Kahala. I have personally known him for more than 20 years, and I hold him in the highest regard both professionally and personally. His leadership will enhance and strengthen our organization, and no doubt have a positive impact on you, our franchise community.

Kahala will continue to be based in Scottsdale, Ariz., and your day-to-day contacts will remain unchanged. As always, we will continue to update you regularly on information pertinent to your business.

In partnership,

[Kevin B]

Kevin Blackwell
Co-CEO
Kahala Corp.

[Kevin Michael]

Comments

1. Visitor
If you follow Kahala's lead you will be terminated
Franchisor Kahala can become financially weak or sell its business without telling anyone until after the fact. However, Kahala franchisees, don't do as your franchisor does. If you are financially troubled, your license can be terminated. If you sell your business without obtaining your franchisor's approval, you will be gone without any money and the buyer will be out of luck.

2. Visitor
Lower prices, higher fees for Cold Stone, Blimpie, Taco Time?
Canadians tend to think of American consumer prices as somewhat pricey. It will be interesting to see if Serruya's instinct tells him to lower menu prices in order to attract more traffic back to the brands. Quiznos' former CEO from Canada did just that when he came south to run the Quiznos business.

I take it that Serruya bought Kahala and its brands in an auctioned bid on the cheap. Nonetheless, Serruya will want to raise fees in order to put Kahala on a healthier financial path. The new franchisor owner pretty much has carte-blanche in increasing franchise fees in various ways, even if the franchise owners don't like it.

3. Don Sniegowski
How zees learn their zor was bought in auction, new owners
Here is the timeline yesterday announcing the buyout of Kahala Franchising by the Serruya family to a very surprised franchisee community.